Mumbai: Tata Consultancy Services (BSE: 532540, NSE: TCS), the leading IT services, consulting and business solutions firm, reported its consolidated financial results according to IFRS and Ind AS for the period ended September 30, 2017.

Financial highlights for quarter ended September 30, 2017

Revenue at Rs30,541 crore +4.3 percent Y-o-Y; +3.2 percent Q-o-Q

Net income at Rs6,446 crore (2.1 percent) Y-o-Y; +8.4 percent Q-o-Q

Operating margin at 25.1 percent; an expansion of 1.7 percent Q-o-Q

Net cash from operations at Rs5,809 crore i.e., 90.1 percent of net income

One new client in $100 million+ band; six clients each added in $50million+, $20million+ and $10 million+ bands

28 clients added in $1 million+ band

IT attrition rate (LTM) down further by 0.3 percent Q-o-Q to 11.3 percent

Total employees: 389,213; gross addition: 15,868 employees

Commenting on the Q2 performance, Rajesh Gopinathan, CEO and MD, said, “We experienced robust volume growth in Q2, driven by good demand across multiple industry verticals. Strong, broad-based client metrics this quarter demonstrates our increasing success with newer customers. Large deal wins this quarter, a good pipeline, and bottoming out of the retail sector softness positions us well.”

Mr Gopinathan added, “We continue to gain share in the fast-growing digital spend of our customers, evident in our industry-leading digital growth in Q2. By sharpening our focus on individual components of the digital service stack, we have been able to bring to bear the full power of our contextual knowledge, research and innovation, and investments in location-independent agile, automation and cloud on our customers’ transformational imperatives and become a trusted partner in their Business 4.0 journeys.”

N Ganapathy Subramaniam, chief operating officer and executive director, said, “It has been a very satisfying performance this quarter, striking a good balance between pursuing revenue growth, particularly in digital opportunities, while tightening our execution to deliver greater efficiency. Our client-centricity and business depth are resulting in industry-leading customer satisfaction levels and strong client metrics. With the sectoral headwinds slowly abating, we expect steadier and stronger growth ahead.”

V Ramakrishnan, chief financial officer, said, "Rigour and discipline in our operations helped accomplish an impressive margin performance and progress along the profitability path we had outlined earlier. Our investment programme remains geared for growth. Continued investments in digital design and transformational capabilities are paying off, and it shows in the strong growth in our digital business.”

Q2 Segment Highlights1

Industries: Strong revenue growth was visible across verticals in the September quarter. With the exception of Retail and CMI, all industry verticals grew above the company average, led by Travel & Hospitality (up 8 percent Q-o-Q), Energy & Utilities (up 7.2 percent Q-o-Q) and Life Sciences & Healthcare (up 3.6 percent Q-o-Q). On a year-on-year basis, all industry verticals – with the exception of BFSI and Retail – grew above 9.5 percent.

Cognitive Business Operations: The value proposition around leveraging cognitive technologies to simplify and streamline business operations is gaining strong traction. Two large deals powered sales momentum in Q2.

IoT: The practice saw double-digit quarterly growth as the mainstreaming of IoT deployments gathered steam, with several wins in this quarter, including a Digital Twin and AI-based remote monitoring and optimisation solution for a Japanese heavy industrial equipment manufacturer.

Engaged by a large UK-based global insurer to provide policy administration services to their four million heritage customers using TCS BaNCS’s digitally enabled, end-to-end policy administration platform for life, pensions and investment products

Selected as a strategic partner by a large North America-based global insurer for application services across multiple geographies and lines of business.

Chosen by one of the world's largest quick service restaurants for global implementation of 'point of sale' software across 58 countries, including country-specific localisation and hosting services on the cloud.

Engaged as the single strategic partner for a leading North America-based pet specialty retailer to transform and optimise all of its IT, infrastructure and business process services.

Partnered with a large APAC-based airline to provide technology managed services for IT applications and infrastructure, enabled by increased automation.

Chosen by a North America-based cable TV provider as a partner for its network and video engineering services.

Selected by a global automotive OEM, headquartered in Europe, as its strategic engineering partner to support the design and development of a new range of vehicles.

Engaged by a Japanese pharmaceutical company to simplify and standardise their IT services delivery.

Chosen by a large APAC-based banking group for a multi-year transformation and maintenance of their information management, social, mobile and digital applications.

Selected by a North America-based global publisher to provide infrastructure services and technology transformation to support their growing digital portfolio.

Chosen by a European communications services provider to implement a business-centric operating model for their applications and shared services.

Key wins in digital services and solutions in Q2:

Consulting & Service Integration

Selected by a leading North America-based global information services firm for a consulting engagement to create an omni-channel experience for its customers through the development of an end-to-end digital customer experience platform.

Chosen as the strategic partner for the largest UK-based banking firm to lead their Devops transformation programme using Agile methodologies.

Partnered with a North America-based leading technology company to provide consulting services to reduce costs by making systems smarter through analytics and automation technologies.

Selected by a North America-based global hotel brand to lead digital transformation initiatives across all available platforms and systems to enhance the customer experience.

Digital Interactive

Strategic partner for a North America-based multinational semiconductor manufacturer to revamp the digital design for all handheld devices controlling autonomous vehicles.

Engaged by a European logistics service provider to revamp their multi-channel digital communications programme using digital interactive technologies.

Internet of Things

Partnered with a leading Japanese power systems company to develop a Boiler Digital Twin, leveraging AI control and industrial analytics to enable far more efficient operations.

Analytics & Insights

Engaged by an APAC-based leading Telecom provider to migrate their existing systems to a Hadoop environment and build an analytics framework using big data technologies.

Selected by a leading North America-based power generation company to improve their accounts receivables by predicting invoice outcomes through advanced analytics and machine learning techniques.

Enterprise Application Services

Chosen by a Europe-based multinational auto manufacturer for sales force service cloud implementation, leading to an enhanced global customer experience.

Cloud Application Services

Engaged by a British airline to facilitate API-fication and enhanced interactions with partner systems using cloud technologies.

Chosen by a North America-based multinational conglomerate for their applications vulnerability management and remediation.

Research and Innovation:

TCS’s research and innovation teams continued to work on various research themes and finding innovative technological solutions to real-world problems. Some key highlights:

The TCS-IIT Kanpur team competed against 16 teams from 10 countries in the Amazon Robotics Challenge held in Nagoya, Japan, and stood third in the ‘pick’ category and fourth overall, ahead of MIT-Princeton and three other teams.

TCS won the Physionet Challenge 2017, in the ECG analytics area at the ‘Computing in Cardiology’ conference in Rennes, France, ahead of teams from ETH Zurich, EPFL, MIT, Oxford University and Georgia Tech.

As of September 30, 2017, the company has applied for 3517 patents, including 82 applied during the quarter. Till date the company has been granted 594 patents.

Human Resources:

Total employee strength at the end of Q2 stood at 389,213 on a consolidated basis, with gross addition of 15,868 employees and net addition of 3,404 employees during the quarter. Overseas recruitment continues apace, with 3,725 employees recruited outside India, bringing the total to 6,979 in the first half of the fiscal year.

The company continues to enjoy best-in-class employee retention rates. The IT attrition rate (LTM) fell 0.3 percent in Q2 to 11.3 percent, while the total attrition rate (including BPS) fell to 12.1 percent. The percentage of women in TCS continues to rise, hitting 35 percent in Q2. The total number of nationalities represented in the workforce stood at 133.

“Our progressive policies and investments in upgrading employee capabilities are driving our industry-leading retention rate. Employees see immense value in the learning opportunities afforded by our Digital Learning programme, and view it as a critical avenue to realise their potential,” said Ajoy Mukherjee, executive vice president and global head, Human Resources.

Awards and Recognition:

Business Leadership:

- Recognised as a prominent ‘Technology Partner’ at the Manufacturing Leadership 100 Awards for the fourth time

- Ranked among the Most Honoured Companies in Asia, and rated the Best Investor Relations Professional, Best Investor Relations and Best IR website in the region in Institutional Investor’s 2017 Annual All Asia Executive Team rankings

- Won Gold and Two Silver Stevies® at the 2017 Great Employers AwardsSM

Gold Stevie® for Achievement in Employee Engagement in the Americas,

Two Silver Stevies® for Achievement in Recruitment and Employer of the Year